Section 9 Relief Against Foreign Assets Permissible Where Remedy Under Section 17 Is Inefficacious For Enforcement

The Petitioner and Respondent entered into a Repayment Schedule Agreement on January 9, 2025, where the Respondent acknowledged a debt of USD 215,310.01 towards demurrage

The agreement stipulated that a default on any installment would make the entire balance immediately payable

The Respondent defaulted on the first installment due on January 15, 2025, citing financial difficulties in various emails while acknowledging the liability

After the Petitioner invoked arbitration before the London Maritime Arbitrators Association (LMAA), the Respondent raised new defenses regarding an oral set-off and a pledge involving a third-party broker, Bulkcom

The Petitioner sought interim protection under Section 9 of the Arbitration Act to secure the claim amount

The Court applied Section 9 of the Arbitration and Conciliation Act, 1996, which grants the Court power to issue interim measures before, during, or after arbitral proceedings

The technical requirements of Order XXXVIII Rule 5 of the CPC (attachment before judgment) need not be strictly met if a "strong possibility of diminution of assets" is shown

The Court followed the Delhi High Court's position in Shanghai Electric Group Co. Ltd., which holds that if a foreign tribunal's interim order is not enforceable against assets in India, the remedy under Section 17 is not "efficacious"

The Court reasoned that Section 9(3) does not impose an absolute bar on Court intervention after a tribunal is constituted; rather, the Court must evaluate if the Section 17 remedy is efficacious

Since the arbitration is seated in London, an interim order by the LMAA Tribunal would not be directly enforceable against the Respondent’s Indian assets in the same manner as a High Court order, making the Section 17 remedy inefficacious

The Court found a "strong prima facie case" based on the Respondent's written acknowledgment of debt in the Agreement and subsequent emails

"diminution of assets" includes the likelihood of assets becoming unavailable due to losses or competing creditors

The Respondent's admission of financial instability and inconsistent defenses created a reasonable apprehension that the award might become a "paper decree"

The Court ordered the Respondent to either deposit USD 262,837.98 plus GBP 9,400 or furnish a Bank Guarantee within four weeks, restrained the Respondent from encumbering assets up to the claim value, and mandated an affidavit disclosing assets within three weeks; the prayer for a Court Receiver was rejected